US Markets
Thursday, December 14th, 2023 3:13 pm EDT
Key Points
- Strong Retail Sales Performance in November: Retail sales in November exceeded expectations, rising by 0.3%, a positive start to the holiday season. This growth contrasted with the 0.2% decline in October and surpassed the Dow Jones estimate of a 0.1% decrease. Excluding automobile sales, there was a 0.2% increase, and when excluding both autos and gas, sales rose by a more significant 0.6%.
- Consumer Resilience Amid Inflation: Despite a 0.1% increase in the Consumer Price Index (CPI) in November, consumers demonstrated resilience by keeping up with the pace of price increases. On a year-over-year basis, retail sales accelerated by 4.1%, outpacing the headline CPI rate of 3.1%. The inflation rate, while still above the Federal Reserve’s 2% target, has significantly decreased from its peak above 9% in mid-2022.
- Sectoral Performance and Economic Outlook: Sales held up well despite a 2.9% decline in gas station receipts, attributed to a broader slump in energy prices. Gas station sales were down 9.4% on a 12-month basis. Offsetting this weakness, there was an increase of 1.6% at bars and restaurants, a 1.3% gain at sporting goods, hobby, book, and music stores, and a 1% increase at online retailers. The “control group” of sales, excluding certain categories, increased by 0.4%. Additionally, the article highlights a sharp slowdown in layoffs and the Federal Reserve’s indication of progress in the fight against inflation, with plans to lower interest rates in 2024 without foreseeing a recession.
In November, consumers demonstrated unexpected resilience, providing a robust start to the holiday season, while signs of easing inflation continued. The Commerce Department’s report revealed a 0.3% increase in retail sales for November, surpassing the 0.2% decline in October and exceeding the estimated decrease of 0.1%. The reported figures are adjusted for seasonal factors but not inflation.
Excluding automobile sales, there was a 0.2% rise, beating the forecast for no change. When excluding both autos and gas, sales saw a more significant increase of 0.6%. Notably, the retail sales data suggests that consumers are outpacing the pace of price increases, with the consumer price index rising by 0.1% on a monthly basis in November.
On a year-over-year basis, sales accelerated by 4.1%, outpacing the headline Consumer Price Index (CPI) rate of 3.1%. While the inflation rate remains above the Federal Reserve’s 2% target, it has significantly decreased from its peak above 9% in mid-2022.
Andrew Hunter, deputy chief U.S. economist at Capital Economics, highlighted that the rebound in retail sales illustrates that the ongoing rapid decline in inflation is not coming at the cost of significantly weaker economic growth.
Despite a 2.9% decline in gas station receipts due to a broader slump in energy prices, sales held up well. Gas station sales were down 9.4% on a 12-month basis. This weakness was offset by a 1.6% increase at bars and restaurants, a 1.3% gain at sporting goods, hobby, book, and music stores, and a 1% increase at online retailers.
The “control group” of sales, which excludes various categories and contributes to the calculation of gross domestic product (GDP), increased by 0.4%. This positive retail sales performance aligns with the recent indication from the Federal Reserve that progress has been made in the fight against inflation, leading to plans for interest rate cuts in 2024. While the Fed anticipates a considerable slowdown in economic growth, a recession is not foreseen. Additionally, the Labor Department reported a sharp slowdown in the pace of layoffs, with initial claims for unemployment insurance totaling 202,000 for the week ended December 9, the lowest since mid-October.
For the full original article on CNBC, please click here: https://www.cnbc.com/2023/12/14/retail-sales-rose-0point3percent-in-november-vs-expectations-for-a-decline.html
